Liquidity Policy

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After a dramatic plunge of more than 8 percent in Chinese stocks on Monday, China's securities regulator pledged to buy shares to calm the market and the central bank hinted at more policy easing to boost liquidity.

As part of its second bi-monthly monetary policy review, RBI cut the repo rate (short-term lending rate) from 7.5 percent to 7.25, but left other policy tools like cash reserve ratio unchanged at 4 percent and Statutory Liquidity Ratio (SLR) at 21.5 percent .

Global management consulting firm Oliver Wyman and Morgan Stanley released detailed report on the subject in March, highlighting that global banks have shrunk their balance sheets by some 20 percent since 2010 which has "significantly" reduced the liquidity in secondary asset markets.

Gaurav Kapur of RBS believes the repo rate will be left unchanged after the 50 basis points cut over the past two-and-a-half months. Focus will be on RBIs assessment on inflation and growth, he says. He expects some steps on monetary transmission.

Sonal Varma, chief economist, Nomura does not see any rate cut in April. She believes the RBI has frontloaded the interest rate cuts in order to give more time to banks to respond going forward. She feels there is the probability of one more rate cut after that.

The Budget has delivered on some pressing issues for MSMEs, such as improving funding, increasing demand through boost to infrastructure-building and addressing the inverted duty structure in some key segments.

In the course of December and January, the balance sheet of the US Federal Reserve (Fed) expanded by 186.7 billion USD to a total of 4.02 trillion USD. That policy reversal came after an impressive 244.6 billion USD liquidity withdrawal between August and November of last year.

After a dramatic plunge of more than 8 percent in Chinese stocks on Monday, China's securities regulator pledged to buy shares to calm the market and the central bank hinted at more policy easing to boost liquidity.

As part of its second bi-monthly monetary policy review, RBI cut the repo rate (short-term lending rate) from 7.5 percent to 7.25, but left other policy tools like cash reserve ratio unchanged at 4 percent and Statutory Liquidity Ratio (SLR) at 21.5 percent .

Global management consulting firm Oliver Wyman and Morgan Stanley released detailed report on the subject in March, highlighting that global banks have shrunk their balance sheets by some 20 percent since 2010 which has "significantly" reduced the liquidity in secondary asset markets.

Gaurav Kapur of RBS believes the repo rate will be left unchanged after the 50 basis points cut over the past two-and-a-half months. Focus will be on RBIs assessment on inflation and growth, he says. He expects some steps on monetary transmission.

Sonal Varma, chief economist, Nomura does not see any rate cut in April. She believes the RBI has frontloaded the interest rate cuts in order to give more time to banks to respond going forward. She feels there is the probability of one more rate cut after that.

The Budget has delivered on some pressing issues for MSMEs, such as improving funding, increasing demand through boost to infrastructure-building and addressing the inverted duty structure in some key segments.

In the course of December and January, the balance sheet of the US Federal Reserve (Fed) expanded by 186.7 billion USD to a total of 4.02 trillion USD. That policy reversal came after an impressive 244.6 billion USD liquidity withdrawal between August and November of last year.

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This is very small PSU company so its all activities depending with government policy: 1. if govt. adopt liquidity policy so its price touch 100/- easily. 2. in general market its price range is 40 to 60.

Rate cuts inevitable due to global easy liquidity policy
Axis Bank chief Shikha Sharma says India will have to play ball with the global easy liquidity policy, and therefore rate cuts are inevitable. "RBI will have to find other ways to tackle inflation," she added.
In an exclusive interview